You have two clients that are considering trading machinery with each other. Although the machines...
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You have two clients that are considering trading machinery with each other. Although the machines are different from each other, you believe that an assessment of expected cash flows on the exchanged assets will indicate the exchange lacks commercial substance. Your clients would prefer that the exchange be deemed to have commercial substance, to allow them to record gains. Here are the facts: Client A Client B Original cost 84,000 126,000 Accumulated depreciation 33,600 67,200 Fair value 67,200 84,000 Cash received (paid) ( 16,800) 16,800 (a) Record the trade-in on Client A's books assuming the exchange has commercial substance. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Include in your journal entry separate account entries for both the new and old machinery. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit
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